RBI Regulations on Loans to Directors Quiz

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Questions and Answers

Which of the following situations would a bank be allowed to grant a loan or advance of Rupees twenty five lakhs or more to a director of another bank?

  • The loan is sanctioned by the Board of Directors/Management Committee (correct)
  • The director is a partner in a firm that the bank has a business relationship with
  • The director is a guarantor for a firm that the bank has a business relationship with
  • The director has a substantial interest in a company that the bank has a partnership with

Under what conditions can a bank grant a loan or advance of Rupees twenty five lakhs or more to a firm in which a director of another bank is interested as a partner or guarantor?

  • The firm has a business relationship with the bank
  • The director has a substantial interest in the firm
  • The loan is secured by collateral
  • The loan is sanctioned by the Board of Directors/Management Committee (correct)

What is the criteria for a bank to grant a loan or advance of Rupees twenty five lakhs or more to a company in which a director of another bank holds substantial interest or is interested as a director or as a guarantor?

  • The company has a business relationship with the bank
  • The director is a partner in the company
  • The loan is sanctioned by the Board of Directors/Management Committee (correct)
  • The director is a guarantor for the loan

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